Singapore-based Continuum Wind Energy Pte Ltd, engaged in wind power generation in India, has received an investment commitment from Morgan Stanley Infrastructure Partners (MSIP), a $4 billion global infrastructure fund sponsored by Morgan Stanley, for expanding its business. Although Continnum and MSIP did not disclose the deal valuation, media reports peg it at Rs 1,200 crore ($210 million) for an over 50 per cent stake, valuing the company at Rs 2,400 crore, or more than $425 million.
o3 capital was the exclusive advisor to the deal.
In an email to VCCircle, Arvind Bansal, CEO and Co-Founder of Continuum Wind stated, “Our company has issued compulsorily convertible preference shares (CCPS) to MSIP.” He said the capital will be used for projects currently under development and for additional projects currently in pipeline.
Bansal added, “This investment commitment by MSIP will help Continuum Wind pursue its chosen path of developing a high quality, technology-agnostic, differentiated business in wind energy. MSIP’s focus on global infrastructure and long-term investment horizon is best suited for building a large scale, long-term business in India’s energy-deficient market. MSIP has committed substantial capital to India’s power sector and brings rich knowledge, expertise and relationships for our benefit.”
This is the third investment by Morgan Stanley in the power sector, as per VCCEdge, the data research platform of VCCircle. In March 2010, Singapore-based Asian Genco Pte Ltd (AGPL), which has investments in Indian power generation assets and engineering services businesses, had raised commitments of over $425 million from a consortium of investors led by Morgan Stanley Infrastructure Partners (MSIP). Other investors included Norwest Venture Partners, General Atlantic LLC, Goldman Sachs Investment Management and Everstone Capital. In May 2011, MSIP also invested $200 million to pick 50 per cent stake in Indus Concessions India Pvt. Ltd.
Continuum Wind was set up in 2010 by Arvind Bansal, an investment banker, Vikash Saraf, ex-Essar Group Director, Sukant Gupta, a former Wipro executive, Ashish Swarup, a former executive of Asian Pulp & Paper and Gautam Chopra, banker. Bansal said Continuum’s wind projects are currently being developed in India, but not restricted to it. In less than three years, Continuum Wind has a portfolio of 500 MW. Of this capacity, 36 MW is under operation, 175 MW would be commissioned in Maharashtra during FY13 and FY14 in phases, while another 300 MW is under development. No specific timeline has been drawn for the completion of these projects. Of the 36 MW operational capacity, 28 MW is located in Gujarat and 8 MW in Maharashtra. An additional 8 MW would be operational in the next 3-4 weeks, taking the total operating capacity to 43 MW.
Continuum Wind started operations in India through its acquisition of Surajbari Wind Farm Development Pvt Ltd, operating in Kutch. Surajbari was acquired from Vestas, a Denmark-based wind power company. The acquisition was made for Rs 72 crore in April 2010. Continuum Wind’s entry in the Indian Renewable Energy market took place through an acquisition and the company is open to considering acquisitions of projects under development or in operation. It is presently evaluating some projects for the same.
Infrastructure-focused MSIP’s key investment areas include energy & utilities, transportation and social infrastructure. It also formed a JV with Isolux Corsan in 2011 for road projects in India. MSIP invested $200 million in the JV, while a similar amount was invested by Isolux. The JV is constructing three highways projects with an investment requirement of more than $1.6 billion.
There have been similar deals in the wind energy space. AMP Capital Advisors invested $29 million in Shalivahana Green Energy Ltd (June 2012); a consortium of IDFC Private Equity, MCap Fund Advisors and TVS Capital put in $27.14 million in ReGen Powertech (April 2012) and Goldman Sachs invested $178.6 million in ReNew Wind Power in September 2011. Meanwhile, Trishe Energy is in talks with a number of PE firms to raise about $100 million and SunBorne Energy Technologies Pvt Ltd is looking for private equity investment worth $20 million.
As of March 31, 2011, the installed wind power capacity in India stood at 14,158 MW or 7.08 per cent of the total installed capacity of 199,877 MW in the country. India has immense untapped wind potential that has now been estimated at a higher 3,000 GW, compared to the earlier estimate of 100 GW, as per World Wind Energy Association (March 2012).
(Edited by Prem Udayabhanu)